Saturday, May 7, 2016

From @Reuters -- It was January 2016 and oil prices had crashed to their lowest in more than a decade.

Saudi Arabia's health minister, Khalid al-Falih, a favourite to take over the oil ministry from his mentor Ali al-Naimi, was not panicking.

Falih told an audience of oil executives, bankers and policymakers at WEF in Davos that the world's top oil exporter might benefit from oil below $30 per barrel.

It could help to speed up reform and restructure the economy, and move Saudi Arabia to a smaller and more effective government and unleash its private sector, he said.

For decades Saudi Arabia, a de facto leader of OPEC, had targeted certain oil price levels. If it did not like the price, it would try to orchestrate a production cut or increase together with its fellow OPEC members.

Things were different this time. For the first time in decades, output cuts were not on the agenda to fix the growing global glut that Saudi Arabia helped create by ramping up supply to drive higher-cost producers such as US shale firms out of the market.

Also for the first time in decades, a royal rather than a non-royal - Deputy Crown Price Mohammed bin Salman - had been appointed a few month earlier to oversee Saudi oil policies and drive the massive change.

Do you not think Prince Mohammed, who is just 30, is doing it all a bit too fast for the generally conservative Saudi society, Falih was asked. "The Royal Highness is very ambitious where he wants Saudi Arabia to be sooner rather later. I can assure you that everybody who works around him is very excited by his vision and energized by his energy," Falih told the audience. "Some people were concerned that we were too slow in the past.. As a former runner, I can tell you that it helps to go through sprints at times to develop your muscular strengths. We are accelerating reform." The writing was on the wall, said the executives leaving Davos. Falih would soon become oil minister reporting to Prince Mohammed, who is quickly turning into the world's most powerful oil figure.